By Jeffrey H. Brochin, J.D.
Convictions were upheld based on overprescribed opioids, although the government failed to prove its kickback allegations.
The 11th Circuit upheld the convictions of two physicians for multiple-counts of violating the Racketeer Influenced and Corrupt Organizations Act (RICO) and the Controlled Substances Act (CSA), but vacated the convictions related to violations of the Anti-Kickback Statute (AKS) (42 U.S.C. §1320a-7b). Their pain clinic wrote prescriptions for millions of doses of opioid drugs after the physicians purchased $1.3 million worth of one opioid manufacturer’s stock and also arranged for a lucrative patient study stipend related to the drug. In addition, the clinic’s nurse practitioners regularly wrote prescriptions for patients’ opioid drugs without being licensed to do so (United States of America v. Ruan, July 10, 2020, Coogler, L).
Convictions on multiple federal violations. Following a seven-week trial in the United States District Court for the Southern District of Alabama, two pain management physicians were convicted by a jury of conspiring to run a medical practice constituting a racketeering enterprise in violation of RICO, conspiring to violate the CSA by dispensing Schedule II drugs, fentanyl, and Schedule III drugs outside the usual course of professional practice and without a legitimate medical purpose; conspiracies to commit health care fraud and mail or wire fraud and conspiracies to receive kickbacks in relation to a federal health care program. They both appealed their convictions, which were all affirmed except for the count of conspiracy to receive kickbacks.
Clinic and pharmacy. Testimony produced at trial established that the physicians co-owned a medical clinic, Physicians Pain Specialists of Alabama (PPSA), and a pharmacy, C&R Pharmacy (C&R). In May 2015, when an FBI raid shut down PPSA and C&R, they had 57 employees and served over 8,000 patients. Their medical practice was lucrative, and from January 2011 to May 2015, one physician made over $3.7 million from PPSA, and the other one made over $3.9 million. C&R received a service fee for each prescription it filled, which amounted to more than 70,000 during those years, netting each of the physicians more than $555,000 from their pharmacy.
Millions of doses prescribed. The CSA makes it a crime for anyone other than a licensed health care professional to dispense a controlled substance, and licensed health care professionals may only dispense Schedule II, III, and IV controlled substances with a prescription. However, such prescriptions are only lawful if they are issued for a legitimate medical purpose in the usual course of the licensed health care professional’s professional practice.
From January 2011 to May 2015, the physicians wrote nearly 300,000 prescriptions for controlled substances, over half of which were Schedule II drugs, and this amounted to millions of doses of opioids and other controlled substances. The government used Alabama’s Prescription Database Monitoring Program (PDMP), a database of all controlled substance prescriptions dispensed statewide to obtain the physicians’ prescribing data, and they particularly focused on the frequent prescribing of a version of fentanyl called transmucosal immediate-release fentanyl (TIRF).
Pill mill operations. The two types of TIRFs that the physicians prescribed were Subsys®, manufactured by Insys Therapeutics, and Abstral®, manufactured by Galena Biopharma, whose average doses cost anywhere from $3,000 to over $20,000 per month. Their prescribing practices placed them among the top TIRF prescribers nationwide, and they often surpassed the next highest prescriber by more than double.
The physicians often prescribed medications based solely on what was in stock at their C&R pharmacy, rather than on the patient’s medical needs. Nurse practitioners testified that the physicians strongly encouraged patients to use C&R and that staff took patients’ prescriptions directly to C&R. One testified that a doctor wanted to know what C&R had in stock before writing prescriptions. In addition, nurse practitioners filled in pre-signed prescription blanks for patients without the patients ever being seen by the physicians.
Financial interests ahead of good practices. One of the ways in which the government sought to prove that the prescribing of Abstral and Subsys deviated from the usual course of professional practice was that their prescribing habits tracked financial incentives rather than their patients’ medical needs. A former Galena sales representative testified that Galena offered doctors $500 per patient to enroll in the study but limited it to 25 patients per doctor. However, the physicians negotiated with Galena for an exception to enroll up to 75 of their patients for a fee of $2,500 per patient. Immediately after Galena approved that arrangement, one physician began prescribing over 1.5 million mcg of Abstral per month.
Shortly thereafter, the physicians began purchasing Galena stock, and between November 2013 and January 2014, they purchased more than $1.3 million of stock, both individually and through PPSA. In a February 2, 2014, one physician wrote to the other that they could "play a big role" in increasing the value of Galena stock, and they further indicated to other colleagues that Galena would have a "substantial market share growth at the end of March."
Proving AKS violations. Count 16 of the indictment charged the physicians with violating the AKS by conspiring with others to accept kickbacks in exchange for letting two workers’ compensation administrators run their in-office workers’ compensation dispensary. The physicians argued that their convictions on Count 16 must be vacated because there was no federal health care program associated with PPSA’s workers’ compensation dispensary. The appeals court agreed, noting that in order to prove a violation of the AKS, the government needed to prove that the appellants (1) knowingly and willfully (2) received remuneration (3) in return for referring individuals to a person for the furnishing of medication (4) paid for by a federal health care program. The statute defines a federal health care program as any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly in whole or in part, by the United States Government. Because the government failed to show that federal funds passed through PPSA’s workers’ compensation dispensary, the court vacated the conviction on Count 16.
The case is No.: 17-12653.
Attorneys: Sonja Ralston, U.S. Department of Justice, for the United States. Dennis J. Knizley (Law Office of Dennis J. Knizley) for Xiulu Ruan. Jackson Roger Sharman, III (Lightfoot Franklin & White, LLC) for John Patrick Couch.
MainStory: TopStory AntikickbackNews ControlledNews DrugBiologicNews FraudNews PrescriptionDrugNews
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